Feb. 20 (Bloomberg) -- Irwan Hidayat had to hold back his
tears when PT Industri Jamu Dan Farmasi Sido Muncul sold shares
in an initial public offering in December.

His mother, Desy Sulistio, the matriarch of Indonesia’s
biggest maker of traditional herbal medicine, couldn’t witness
its trading debut on the Jakarta stock exchange. It would have
been difficult for the 86-year-old, who relies on a wheelchair
and a nurse to get around, to travel the 250 miles from her
residence in Semarang, Central Java, to Jakarta. Irwan also
regretted that his late grandmother, the founder of the company,
and his father, who died in 1994, weren’t present.

“I was very emotional,” Irwan, the 66-year-old head of
Sido Muncul, said last week in an interview in Semarang, where
the business is based. “It was a golden moment and they
couldn’t experience it.”

Sido Muncul has surged more than 50 percent since the IPO,
making his mother a billionaire, according to the Bloomberg
Billionaires Index. The matriarch and her five children,
including eldest son, Irwan, control 90 percent of the company,
according to regulatory filings. Desy, whose Chinese name is
Siem Giok Hwa, has never appeared on an international wealth
ranking.

The company’s herbal products -- known as jamu -- are made
from roots, herbs, spices and fruits, and come in the form of a
drink, capsule or paste. Sold as traditional medicine for
hundreds of years in the world’s fourth-most populous nation,
Indonesians revere it for its perceived power to heal ailments
such as arthritis and sexual dysfunction.

Flatulence, Nausea

Sales of Indonesian traditional medicine are expected to
increase 55 percent to about $800 million by 2017, from about
$500 million in 2012, according to a June report by Euromonitor
International.

“It is becoming quite popular,” said Harry Su, PT Bahana
Securities’ Jakarta-based head of research. “The perception of
herbal is that it’s more natural and healthier to consume.”

Sido Muncul makes the country’s best-selling herbal cold
remedy, Tolak Angin, which means “repel the wind” in Bahasa.
Small yellow bags of the concoction sell for about 25 cents each
at street stalls, pharmacies and supermarkets. Indonesians also
take it for flatulence, nausea and jet lag.

Desy’s mother, Rahkmat Sulistio, came up with the formula
for Tolak Angin when she started a jamu business in 1940 in
Yogyakarta, Java. She moved to Semarang in 1949 and rented two
rooms, which served as a home for the family and a plant to
pound herbs. She set up Sido Muncul, which means “a dream comes
true” in Javanese, in 1951, and moved to a bigger factory the
following year.

Children’s Help

Her daughter and China-born son-in-law, Jahja Hidajat,
joined the company in 1953, taking a 50 percent stake. They
began running the business when Rahkmat retired in 1970.

Jahja died in 1994. When Desy’s deteriorating health slowed
her down about a decade later, she handed the reins to her
children. Irwan, the eldest, became president director just
before Sido Muncul’s initial public offering last year.

“If Sido Muncul collapses, the eldest child is to be
blamed,” Desy said in an interview last week at her daughter’s
hilltop restaurant in Bahasa. “You must be wise in dealing with
your siblings,” she said to Irwan, her voice choked with
emotion.

She also wants her children to help the poor. Sido Muncul
has paid for 36,000 cataract surgeries since 2011 and hires
buses each year for 20,000 people in Jakarta who can’t afford to
pay for trips back to their villages during the Muslim Eid-ul-fitr celebration.

Seahorse, Ginseng

Desy and her daughter, Sandra Linata Hidayat, guard the
family’s jamu recipes with two employees. The company uses about
500 ingredients, including cloves, ginger, galangal and
turmeric. The matriarch, who goes for medical checkups in
Singapore once every three months, says her herbal concoctions
have been more effective in treating her ailments than Western
medicine.

Sido Muncul’s factory near Semarang can produce 80 million
sachets of Tolak Angin a month. It plans to use part of the
money from its share sale to more than double its factory’s
monthly output to 200 million sachets by the end of next year,
Irwan said.

The factory also makes more than 180 million sachets of
energy drink Kuku Bima every month. Sido Muncul sells an
aphrodisiac of the same name that’s made from seahorse and
ginseng.

200 Products

Irwan said his company applies the same standards as the
pharmaceutical industry and conducts scientific tests in its
laboratory before putting its products on the market. In local
neighborhoods, old-fashioned jamu sellers still peddle their
homemade formulas in a basket fastened to their torsos with a
fabric sling.

“In 1990, I realized that people didn’t trust the jamu
industry,” said Irwan. “We talked about our experience but
it’s not scientifically proven. One of the ways to gain trust is
through research.”

Sido Muncul, which makes about 200 products, plans to
acquire a pharmaceutical company in Indonesia to complement its
business, Irwan said. He also intends to expand into new markets
overseas, including China, and turn Sido Muncul into a global
brand. The family owns Hotel Tentrem in Yogyakarta, the cultural
center of Java, and Hotel Candi Baru, a restored Dutch colonial
building in Semarang.

Desy asked her children five years ago to prepare for an
IPO. The plan almost unraveled when Irwan decided against it.

“It’s not easy for a family-owned company to go public,”
he said. “I was content with what I had.”

The matriarch, who has 13 grandchildren and 14 great-grandchildren, called him three times that day and said she
wouldn’t be able to sleep if he didn’t promise to fulfill her
dream. Irwan gave her his word.

“She was thinking about the future. It’s not because an
IPO would make us rich, but the company would be managed in a
more transparent way,” he said. “Her wish is that the fourth
generation will not fight because so many families do.”